Why The Raptors Might Not Want to Take Back A TPE In A Bosh Deal

The Raptors could try and do a S&T with Bosh.

In return for Bosh the Raptors could receive players and/or draft pick(s), cash and what is called a Traded Player Exception or TPE

Simply put a TPE is a way for a team that is over the Salary Cap which the Raptors are to make an unbalanced trade money wise. By using what is called the TPE the team over the cap can trade a player or players away whose current annual salary (2010-11 in this case) is greater than the total salaries that they receive back. The difference would be what is called a TPE. The team could then use the TPE in a future trade to balance out a the deal.

So for example if Toronto gave Bosh a maximum contract that paid him say $17 million for 2010-11 though I could be slightly off and then trade Bosh to the Heat for future draft picks and a TPE, the TPE would be $17 million to balance the trade.

Now there are two problems with this.

1. TPEs can only be used to acquire other players and not be used to sign free agents

2. The TPE amount counts against the teams Salary Cap Hold until it either expires, one year if the original trade was a non-simultaneous trade. This means that the Raptors could wind up paying a luxury tax for 2010-11 even though they are might wind up paying actual salaries for 2010-11 of under $60 million. The luxury tax threshold for 2010-11 is now estimated to be around $68-69 million.

So if you take the Raptors current roster based upon Johnson getting $5.5 million for 2010-11 the 12 current players would total about

Now keep in mind that this is before adding at least one more player to 12 to get to the league required minimum of 13 players. Most likely the Raptors could have 14 or 15 under contract like most teams. So you can add a minimum of probably $1 - 2 million more.

Now of course if the Raptors could trade some of that TPE for a player say like CP3 then it would probably make sense to go take the TPE and go over the luxury tax threshold.

The problem is that unless they know that they can absolutely make a trade for someone that can help them they wind up paying a luxury tax in 2010-11 and don't even get the benefit of having the players. On top of that if the Raptors wanted to sign someone to a full MLE for say $5.6 million it would actually cost them $11.2 million including the 100% luxury tax since they would be over the luxury tax threshold before the transaction.

Now this is how I understand taking a TPE for Bosh would work. However I am no NBA CBA expert and far from it to say the least. If someone else has some corrections to what I have posted I am sure we would all appreciate reading them.

I apologize in advance if I am totally wrong on this and wasted people's time reading it.

Good explanation for us all Buddahfan. If they're looking to acquire a trade exception they're committed to paying the tax if it places them in that territory. That's my thoughts. Colangelo said early on he saw some scenarios that could see them over the tax threshold by as much as $10M.

Also, say the Raptors hold onto the TPE for a year (which is the max I think) and pay the tax. Next year when $10M comes off their cap for Evans and Banks, they combine the 2 and they could potentially trade for a max player.

This brings up a couple of questions. First are you sure about the cap hold? I don't think that's right, as Orlando got a trade exception for the Turkoglu trade, and they were slightly over the luxury tax, so I doubt they would have done it just to help the Raptors out.

Also, wouldn't the trade exception be able to be used in a sign and trade? You would simply be trade the trade exception, so while they can't sign a free agent outright, they can do a sign and trade for one.

This brings up a couple of questions. First are you sure about the cap hold? I don't think that's right, as Orlando got a trade exception for the Turkoglu trade, and they were slightly over the luxury tax, so I doubt they would have done it just to help the Raptors out.

Also, wouldn't the trade exception be able to be used in a sign and trade? You would simply be trade the trade exception, so while they can't sign a free agent outright, they can do a sign and trade for one.

No I am not sure about the TPE and the Cap Hold but it makes sense especially if you go to the link on NBA CBA FAQs and read #s 69-71

The TPE can be used in another trade but not for signing free agents. However, if the TPE does count against your Cap Hold and you can't use it for a trade because you can find a trade to make you get stuck with this huge dollar amount counting against your Cap Hold and in this case it would put the Raptors into the Luxury tax and they would have nothing to show for their trouble.

Just taking back a TPE for the sake of getting something isn't always the best way to go. Again this is how I understand it. Maybe you could ask Devlin or Eric Smith etc. and see what they say.

A traded player exception does count as a cap hold for teams who are below the cap. So when computing cap space you deduct the cap hold. For example, say the Knicks have $34 million in cap space but a TPE worth $10 million then they'd only have $24 million in cap space. A team can renounce it's rights to the TPE (same as MLE + LLE + Disable player exception) in order to free up their maximum cap space.

However, a TPE does not count as part of a team's end of season payroll. It does not count as a salary or towards luxury tax payments. No cap holds do.

Therefore, there is no downside to the Raptors having a large traded player exception.

Also, say the Raptors hold onto the TPE for a year (which is the max I think) and pay the tax. Next year when $10M comes off their cap for Evans and Banks, they combine the 2 and they could potentially trade for a max player.

Am I right on that?

There are two types of S&T deals a simultaneous and non-simultaneous. The rules are different for each. I think if it is a non-simultaneous S&T then as I recall the TPE expires after one year. Go to NBA CBA FAQ #s 69-71 for clarification.

In return for Bosh the Raptors could receive players and/or draft pick(s), cash and what is called a Traded Player Exception or TPE

Simply put a TPE is a way for a team that is over the Salary Cap which the Raptors are to make an unbalanced trade money wise. By using what is called the TPE the team over the cap can trade a player or players away whose current annual salary (2010-11 in this case) is greater than the total salaries that they receive back. The difference would be what is called a TPE. The team could then use the TPE in a future trade to balance out a the deal.

So for example if Toronto gave Bosh a maximum contract that paid him say $17 million for 2010-11 though I could be slightly off and then trade Bosh to the Heat for future draft picks and a TPE, the TPE would be $17 million to balance the trade.

Now there are two problems with this.

1. TPEs can only be used to acquire other players and not be used to sign free agents

2. The TPE amount counts against the teams Salary Cap Hold until it either expires, one year if the original trade was a non-simultaneous trade. This means that the Raptors could wind up paying a luxury tax for 2010-11 even though they are might wind up paying actual salaries for 2010-11 of under $60 million. The luxury tax threshold for 2010-11 is now estimated to be around $68-69 million.

So if you take the Raptors current roster based upon Johnson getting $5.5 million for 2010-11 the 12 current players would total about

Now keep in mind that this is before adding at least one more player to 12 to get to the league required minimum of 13 players. Most likely the Raptors could have 14 or 15 under contract like most teams. So you can add a minimum of probably $1 - 2 million more.

Now of course if the Raptors could trade some of that TPE for a player say like CP3 then it would probably make sense to go take the TPE and go over the luxury tax threshold.

The problem is that unless they know that they can absolutely make a trade for someone that can help them they wind up paying a luxury tax in 2010-11 and don't even get the benefit of having the players. On top of that if the Raptors wanted to sign someone to a full MLE for say $5.6 million it would actually cost them $11.2 million including the 100% luxury tax since they would be over the luxury tax threshold before the transaction.

Now this is how I understand taking a TPE for Bosh would work. However I am no NBA CBA expert and far from it to say the least. If someone else has some corrections to what I have posted I am sure we would all appreciate reading them.

I apologize in advance if I am totally wrong on this and wasted people's time reading it.

Actually, you might be getting it wrong. TPE have no value in regards to the cap(it is like a credit, you get from a store for returned goods to buy from that same store), it only counts against the cap if it is used to acquire players. I have been looking at NBA team salaries and I don't see any mention of TPE or "cash considerations" in the salary log imo. I might be wrong though.

A traded player exception does count as a cap hold for teams who are below the cap. So when computing cap space you deduct the cap hold. For example, say the Knicks have $34 million in cap space but a TPE worth $10 million then they'd only have $24 million in cap space. A team can renounce it's rights to the TPE (same as MLE + LLE + Disable player exception) in order to free up their maximum cap space.

However, a TPE does not count as part of a team's end of season payroll. It does not count as a salary or towards luxury tax payments. No cap holds do.

Therefore, there is no downside to the Raptors having a large traded player exception.

Thanks for clearing that up, Dave. That makes sense.

Wouldn't it be funny, though, if the Raptors get a TPE in a sign and trade for Bosh and the Raptors use it to go and sign and trade for LeBron? Okay, highly unlikely, but it would be hilarious.

Actually, you might be getting it wrong. TPE have no value in regards to the cap(it is like a credit, you get from a store for returned goods to buy from that same store), it only counts against the cap if it is used to acquire players. I have been looking at NBA team salaries and I don't see any mention of TPE or "cash considerations" in the salary log imo. I might be wrong though.

In addition, Buddhafan, click salaries on the homepage, check Orlando's salaries for more explanation. I saw the Trade Exception there, my bad.. It does have a cap hold but if you checked the cap was above $100m, yet Orlando did not pay the approx. $30m in luxury tax difference($60m in CBA terms). Rather, Orlando paid approx. $11m in luxury tax and checking the salaries shows that the luxury tax was only paid for players committed to the team financially, so I was right about the TPE only having a value when it is used to buy players.. draft picks have no value according to cba and TPEs have a cap hold but do not affect luxury tax payments, only salaries to committed players are used to calculate the luxury tax. A trade exception and draft picks might just be the best deal for the Bosh trade. Hope, the Orlando analogy helped..

Simply put a TPE is a way for a team that is over the Salary Cap which the Raptors are to make an unbalanced trade money wise. By using what is called the TPE the team over the cap can trade a player or players away whose current annual salary (2010-11 in this case) is greater than the total salaries that they receive back. The difference would be what is called a TPE. The team could then use the TPE in a future trade to balance out a the deal.

I need to make a long-winded clarification on this (not just for you but anyone else who may still be confused), and hopefully it won't make it even more convoluted. =)

TPE, or traded player exception, is used to refer to two different things. Usually, when we say "let's S&T Bosh for a TPE", we're referring to the trade exception credit (non-simultaneous trade aspect of TPE) that the team gets for taking back less salary in a 1-for-N trade (N being any number of players). TPE is actually the mechanism that oversees any and all trades by teams over the cap. Any time a cap team makes a simultaneous trade, it can take back no more than 125% +$100k of the salaries they are trading away (there is no limit on how little you take back, however).

I usually call this the trade salary matching rule or simply the 125% +$100k rule so it's less confusing, but this falls under the simultaneous trade aspect of TPE. Thus, to say TPE is simply a way for a cap team to make an unbalanced trade isn't exactly correct. It's how a cap team makes ANY trade. Without this exception, no cap team can make trades, not for less, more, or even equal salary. We don't hear about it because it happens so commonly there's no reason to mention using the TPE to make the trade.

The goal of the non-simultaneous aspect of TPE, however, is to allow cap teams to maintain their cap flexibility when they trade ONE player away for less salary. I don't have the exact numbers off-hand (and to make the example easier I'm going to round like crazy), but let's say Toronto had a payroll/cap number of $66 mil last year and $17 mil of that is Bosh's cap hold. Let's also say the salary cap for 2010-2011 is $56 mil (won't be determined until July 7th). If Bosh walks or is traded for only draft picks (no salary), then with Bosh's $17 mil completely off the books, we are down to $49 mil, or just $7 mil in cap space (which is why, as a lot of people tend to wonder, we can't simply replace Bosh with another max FA) and no MLE. By trading Bosh by himself (you can still trade Bosh and Turkoglu together, for example, and still get a TPE but it has to be possible to divide the paperwork into two separate 1-for-N trades), the TPE allows us to essentially complete the Bosh trade on a later date as if it was one big trade and not lose the use of the amount above the salary cap. The TPE credit granted is equal to 100% +$100k of the traded player's salary (instead of 125% +$100k of a simultaneous trade).

Buddahfan wrote:

Now there are two problems with this.

[...]

2. The TPE amount counts against the teams Salary Cap Hold until it either expires, one year if the original trade was a non-simultaneous trade. This means that the Raptors could wind up paying a luxury tax for 2010-11 even though they are might wind up paying actual salaries for 2010-11 of under $60 million. The luxury tax threshold for 2010-11 is now estimated to be around $68-69 million.

There's no need to differentiate the duration of the TPE credit between non-simultaneous and simultaneous here because you simply do not get a TPE credit in a simultaneous trade. For example, Banks and Evans for a player with 80% of their salary is a simultaneous trade because it cannot be separated into two 1-for-N trades. Also, Bosh for Amare is also necessarily a simultaneous trade (even though it fits 1-for-N) because Amare's salary exceeds the 100% +$100k limit of a non-simultaneous trade. Even if you don't intend to "complete the trade" on a later date, if you trade Bosh for less than 100% +$100k of his salary, it's still deemed a non-simultaneous trade and you WILL get a TPE credit.

And yes, like other people have already mentioned in this thread, while the TPE credit counts when determining whether you are above the cap (and thus, whether you will have the MLE available), it does not count as payroll for the purpose of the luxury tax. Thus, the only potential downside in a S&T are the contract obligations you receive in return, or the contract you trade for using the TPE credit, but never, ever, the TPE credit itself.

I need to make a long-winded clarification on this (not just for you but anyone else who may still be confused), and hopefully it won't make it even more convoluted. =)

TPE, or traded player exception, is used to refer to two different things. Usually, when we say "let's S&T Bosh for a TPE", we're referring to the trade exception credit (non-simultaneous trade aspect of TPE) that the team gets for taking back less salary in a 1-for-N trade (N being any number of players). TPE is actually the mechanism that oversees any and all trades by teams over the cap. Any time a cap team makes a simultaneous trade, it can take back no more than 125% +$100k of the salaries they are trading away (there is no limit on how little you take back, however).

I usually call this the trade salary matching rule or simply the 125% +$100k rule so it's less confusing, but this falls under the simultaneous trade aspect of TPE. Thus, to say TPE is simply a way for a cap team to make an unbalanced trade isn't exactly correct. It's how a cap team makes ANY trade. Without this exception, no cap team can make trades, not for less, more, or even equal salary. We don't hear about it because it happens so commonly there's no reason to mention using the TPE to make the trade.

The goal of the non-simultaneous aspect of TPE, however, is to allow cap teams to maintain their cap flexibility when they trade ONE player away for less salary. I don't have the exact numbers off-hand (and to make the example easier I'm going to round like crazy), but let's say Toronto had a payroll/cap number of $66 mil last year and $17 mil of that is Bosh's cap hold. Let's also say the salary cap for 2010-2011 is $56 mil (won't be determined until July 7th). If Bosh walks or is traded for only draft picks (no salary), then with Bosh's $17 mil completely off the books, we are down to $49 mil, or just $7 mil in cap space (which is why, as a lot of people tend to wonder, we can't simply replace Bosh with another max FA) and no MLE. By trading Bosh by himself (you can still trade Bosh and Turkoglu together, for example, and still get a TPE but it has to be possible to divide the paperwork into two separate 1-for-N trades), the TPE allows us to essentially complete the Bosh trade on a later date as if it was one big trade and not lose the use of the amount above the salary cap. The TPE credit granted is equal to 100% +$100k of the traded player's salary (instead of 125% +$100k of a simultaneous trade).

There's no need to differentiate the duration of the TPE credit between non-simultaneous and simultaneous here because you simply do not get a TPE credit in a simultaneous trade. For example, Banks and Evans for a player with 80% of their salary is a simultaneous trade because it cannot be separated into two 1-for-N trades. Also, Bosh for Amare is also necessarily a simultaneous trade (even though it fits 1-for-N) because Amare's salary exceeds the 100% +$100k limit of a non-simultaneous trade. Even if you don't intend to "complete the trade" on a later date, if you trade Bosh for less than 100% +$100k of his salary, it's still deemed a non-simultaneous trade and you WILL get a TPE credit.

And yes, like other people have already mentioned in this thread, while the TPE credit counts when determining whether you are above the cap (and thus, whether you will have the MLE available), it does not count as payroll for the purpose of the luxury tax. Thus, the only potential downside in a S&T are the contract obligations you receive in return, or the contract you trade for using the TPE credit, but never, ever, the TPE credit itself.

NBA Free Agent Rumors: Letting Chris Bosh Walk is an Option for Toronto Raptors
by Os Kavcar Contributor
Written on July 04, 2010

Are you turned off by the way Bosh acts lately?

Bryan Colangelo should be coming dangerously close to shooting down the circus we came to know as 2010 free agency period. Well Bryan, it is about time...

Between tweets, dinners, covert meetings, people popping out of nowhere to pass out unfounded rumors, and worse yet, possible tempering, I don't think we would be able to look back after 10 years and find anything to be proud of.

Toronto Raptors fans were initially shocked to hear that the front office might be fine with getting nothing in return for their franchise player. I am sure their first response did include at least one swear word.

But if one carefully weighs the options and visualizes the possible outcomes, it should be fairly obvious to anyone with average vision why the Toronto Raptors front office has every right to think about standing up for themselves...........

Believe me when I say this, that most of the fans already prefer getting nothing in return for Chris Bosh rather than getting someone to hinder those guys' development. If nothing else, they are tired of overpaid and underachieving players stealing minutes from young talents.

Last but not the least, Bryan Colangelo is refusing to be pushover. He is aggressive and assertive and basically saying, "If we don't get something of value in return, we will not just get something to get something."

He is also letting Chris Bosh know that if he wants the extra year and $30 million, he better start working with the team and help them to create a value of his departure.

Toronto Raptors fans! Today, you should be proud of your general manager and stand by him. If anything, you will walk away with your dignity and self-respect.